PERSPECTIVES

Strategy in chemicals: Q&A with Accenture’s Bernd Kreutzer

What factors are having a strategic impact on the chemical industry?
The global market for chemicals has changed substantially in the past decade, and the pace of change continues to increase. Competition is fiercer than ever. In addition, the sector is currently undergoing rapid structural change and faces high volatility. Price pressures, over capacity and shorter product cycles increase the need to decisively manage product portfolios. The rising M&A activity echoes the situation.

Companies from the Middle East and Asia, driven by their feedstock, energy and labor advantages, intensify the situation. Shifts in the availability and cost of feedstocks and the economic slowdown in China are forcing chemical companies to continuously evaluate their geographic activities.

Lastly, a major challenge—but also a great opportunity—is the transformation of the chemical industry from a supplier of products to a provider of sustainable solutions.

What changes do you see on the horizon for chemical companies?
As suggested above, chemical companies are on a journey to become solution engines for creating a sustainable future and helping solve the world’s biggest problems. I see that as a very big change and an exciting opportunity for the industry as well. My Accenture colleagues and I are truly honored to help our clients drive new ways to grow, continuously redefine their strategies and search for innovations.

We see several enablers for chemical companies to manage this journey. One way is to embrace new business models to serve new markets. Another is to adopt digital technologies across the value chain to decrease response times, save energy, speed up development times, and increase transparency and insights for additional efficiency improvements.

Given your European roots, what do you think is unique about the chemical industry in Europe?
Historically, the European chemical industry has been a leader in chemical production and based its success on innovation and exports. It makes an important contribution to Europe’s overall economic performance and is known as an employment generator. With globalization came a decline in investment and production in Europe. In addition, we saw an erosion of export competitiveness, mainly in petrochemicals and to some extent in the polymer segment.

This said, the innovation capability of the European chemical industry has to be the basis for the future. When I mention innovation, I mean it not solely in terms of product innovation, which is of course a must, but also innovation with regard to business model and value chain improvements. Industry convergence is a theme that is starting to reach the chemical industry with very interesting effects. And, all stated pressures will require chemical companies to work on their resilience in the face of change.

What experiences piqued your interest in chemicals?
From my academic background, I am a petroleum engineer, with a natural interest for process industries. I like the style of the chemical industry, which is very different from automotive or banking, for example. Given the long investment cycles in chemicals, decision making doesn’t allow a lot of room for errors.

Industry leaders are confronted daily with a major challenge—on one hand, to be innovative, flexible and responsive, and on the other hand, to be sound in their decision making. That’s a challenge that is personally quite interesting.

You have a passion for sports outside of work. You are a three-time IRONMAN finisher, play golf and sail. Why is this so important to you?
When you say it that way, the question becomes: When do I work? Joking aside, the sports I pursue all have some common elements. They require strategic thinking, are complex, develop resilience and they are difficult to master.

Long-distance triathlon and marathon running brings me to the limits of my mental and physical fitness. I like golf, but I am not very good. However, I learn a lot about people when I play with them.

Sailing offers different outlets for me. If I’m doing it for fun, it’s about the elements, the crew, and the locations. If I’m sailing competitively, it’s a mixture between chess playing and Formula One driving as many things have to come together to win. My favorite sailing spots are on the Adriatic Sea and the lakes across Europe.

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